Replacement Times for TV Sets Are Normally Distributed with a Mean

question 43

Multiple Choice

Replacement times for TV sets are normally distributed with a mean of 8.2 years and a standard
Deviation of 1.1 years, (based on data from "Getting Things Fixed," Consumer Reports) .
(i. If you want to provide a warranty so that only 3% of the TV sets will be replaced before the
Warranty expires, the length of warranty you would recommend would be 6.13 years.
(ii. The probability that a randomly selected TV will be replaced after more than 10.0 years is
0) 0505.

• A) (i) and (ii) are correct statements.
• B) (i) is a correct statement but not (ii).
• C) (ii) is a correct statement but not (i).
• D) (i) and (ii) are false statements.

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Definitions:

Marginal Tax Rate

The rate at which the next dollar of taxable income is taxed, indicating the impact of the last dollar earned on one's tax obligations.

Tax Shield

The reduction in income taxes that results from taking an allowable deduction from taxable income.

CCA Class

Refers to the classification system for capital cost allowance purposes in Canada, determining the rate at which assets can be depreciated for tax purposes.

Marginal Tax Bracket

The tax rate that applies to the final dollar of taxable income for a person or organization.